New DoD Rule In Place Relating To Government Contracts

The Department of Defense (DoD) issued a rule last month that barred the use of the Department’s funds when such funds are used in certain contracts. The contracts at issue with the new rule are those with entities that require their employees or contractors to sign internal confidentiality agreements or statements that restrict their employees or contractors from reporting instances of waste, fraud or abuse to the investigative representative of the department or agency authorized to receive that information. The rule was effective immediately upon issuance and is codified in the Federal Acquisition Regulation (FAR) at Sections 252.203-7998 and 252.203-7999.

The new rule puts a halt on contractors requiring employees to sign non-disclosures so that they can resolve the issue internally. Rather, the new regulation protects employees and allows them to report any waste, fraud or abuse to the appropriate investigative or enforcement representative of the Federal agency or department that is authorized to receive such information. See § 252.3203-7998(c). To emphasize how important this new regulation is, Section 252.203-7999(b) requires that contractors notify employees that the restrictions of any internal confidentiality agreements that are now covered by this clause are no longer in effect.

Lawyers at Beasley Allen in our Consumer Fraud Section continue to investigate fraud against both the federal and state governments. We encourage any person who knows of fraudulent activities to step forward. Potential whistleblowers have the right not to be retaliated against for doing the right thing and reporting the fraud they have witnessed. Any person considering doing the right thing and blowing the whistle is strongly urged to seek legal advice before doing so. Lawyers in our Consumer Fraud Section are very familiar with the federal False Claims Act and its state counterparts and can guide whistleblowers along the process. If you have any information and would like to speak with a lawyer, contact Andrew Brashier, a lawyer in our firm’s Consumer Fraud Section, at Andrew.Brashier@BeasleyAllen.com, or at 800-898-2034 or 334-269-2343.